International Finance

Introduction

In our discussion of foreign trade in International Trade, we left out one crucial element: How do buyers and sellers in different countries do business when they all use different currencies? When a giant bluefin tuna is packed in ice and flown from Cape Cod to Tokyo, the fishing boat captain wants to be paid in dollars. But the Japanese fishmonger has nothing but yen. That doesn't help the Cape Cod captain, who has to pay his crew and his bills in dollars. So the Japanese fishmonger must somehow pay for the tuna in dollars.

How are these problems resolved? What determines how many yen a dollar is worth? In other words, how does the foreign exchange system work?

This section answers these questions and explains the foreign exchange markets, balance of payments, International Monetary Fund, and what is meant by a “strong” and “weak” dollar.

book cover

Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

To order this book direct from the publisher, visit the Penguin USA website or call 1-800-253-6476. You can also purchase this book at Amazon.com and Barnes & Noble.

stay connected

Sign up for our free email newsletters and receive the latest advice and information on all things parenting.

Enter your email address to sign up or manage your account.

Facebook icon Twitter icon Follow Us on Pinterest

editor’s picks

highlights

Join BIC on our mission to save handwriting and Fight For Your Write! Writing helps kids become better readers, boosts their confidence and sparks their creativity. Visit BICFightForYourWrite.com to sign our petition to save handwriting!

7 Fun Driveway and Sidewalk Games for Kids
Looking for classic outdoor games kids can play in the driveway or on the sidewalk, just like the good ol' days? From hopscotch to bubble-blowing contests, there's something for all ages!

Kindergarten Readiness App Wins Gold
Our Kindergarten Readiness app won the Gold Award of Excellence in the educational category at the 2014 Communicator Awards. This valuable checklist comes with games and activities to help your child practice the essential skills she needs for kindergarten. Download the Kindergarten Readiness app today!

Best Sun Safety Practices for Babies
Follow these sun safety practices for babies to ensure your little one stays safe on the beach and on sunny days all year long.